Imf, Argentina Reach Agreement On Austerity Plan

June 12, 1985|By New York Times

WASHINGTON — The International Monetary Fund said Tuesday that it had reached agreement with Argentina on an austerity program that opens the way for up to $1.2 billion of loans to the country by next March 27.

The austerity measures are designed to put the developing world's third- biggest debtor country, with $48 billion owed to foreign creditors, into a position to pay its way and keep current with its debt obligations. Only Brazil and Mexico owe more.

More than $1 billion is past due on Argentine debt, and arrears have been mounting at a rate of $150 million a month.

The new pact requires that inflation, which ran at 1,010 percent in the last 12 months, be brought down to an annual rate of 150 percent by next April.

Recommendations to slow inflation include cuts in growth of the money supply, higher interest rates, a limit on wage increases at 90 percent of inflation, higher fees for government services and sharp cuts in the government deficit.